Entering a partnership with a venture capital firm is a complex decision. In 2016, there were 898 venture firms in the United States alone. This competitive market makes the process of choosing a VC difficult.
Entrepreneurs need to consider their investment strategy and search for investors with expertise in their market. Before agreeing to meet with a VC, the most promising entrepreneurs conduct meticulous due diligence by reading blogs, Tweets and articles. This poses a question: in venture capital — where everyone’s money is just as green — how can your VC firm stand out?
VC marketing and PR trends
Over the past three years, venture capital firms have recognized an increasing need for marketing and PR. In 2014, an East coast team became the first venture firm in Boston to hire a Director of Platform. A Platform in venture capital is when investors offer resources to entrepreneurs beyond money and their partner’s time and expertise. Directors of Platform oversee strategic internal and external initiatives like marketing and design to support portfolio companies and the local startup community.
From a strategic perspective, these hiring decisions make sense. Firms that dismiss the power of branding, risk competing solely on price, valuation and terms — not the most powerful differentiators.
According to Jyoti Bansal, founder of AppDynamics (a company acquired for $3.7 billion), the top three considerations when choosing a VC include credibility of the firm, compatibility of partners and the firm’s belief in the startup
“[Entrepreneurs] want [their] key investors and board members to have a fundamentally strong conviction in what [they] do as a company and [who they are] as an entrepreneur,” wrote Bansal. A VC firm must communicate these.
Demonstrating credibility and capturing the personality of your partners requires intentional public relations efforts. So, what does effective PR look like for a top VC firm?
The power of public relations in VC
Five years ago, Marc Andreessen and Ben Horowitz proved the power of branding and content marketing for VC firms. By engaging in aggressive marketing through blogs and Twitter, these two venture capitalists appealed directly to their target audience: top-tier entrepreneurs.
To strengthen the firm’s PR efforts, Andreessen Horowitz hired Margit Wennmachers, founder of Outcast Communications. Wennmachers organized dinners with reporters and pitched story ideas to build a strong brand for the firm. These strategies were instrumental in establishing Andreessen Horowitz’s credibility and consequent success. In just three years, Andreessen Horowitz raised $2.7 billion — more than any other venture capital firm in that same time span.
Horowitz isn’t an isolated case. Some of the most successful VC firms have adopted integrated marketing and strategic PR campaigns:
First Round Capital leveraged the power of Camille Ricketts, Head of Content and Marketing, to grow their new publication, First Round Review.
Jason Lemkin launched SaaStr Annual. Two years later, the event attracts over 10,000 attendees.
Mark Suster, angel investor and investment partner at Upfront Ventures, built his brand by creating content for entrepreneurs on Twitter and his blog, Both Sides of the Table.
Fred Wilson branded his firm, Union Square Ventures, through his AVC blog and Twitter.
“Today, you will be hard pressed to find a venture capital firm where at least one partner isn’t actively producing content in an effort to position themselves as the smartest VC out there,” said Janessa Lantz, senior manager of marketing at Hubspot.
The best VC firms use integrated marketing campaigns to build brands that are consistent and received by the firm’s target market. From company publications to events, blogs to Tweets, VC firms cannot dismiss the power of branding.
Why early stage VC firms should outsource PR
While it may not make sense to hire a full-time Director of Platform as an early stage VC, investing in public relations is a smart move. VC firms that build strong brands, achieve several distinct advantages:
• Brand credibility can lead to enhanced deal flow.
• Platform offerings can be additional differentiators in an over-competitive market.
• Firms can achieve better deal terms and structures.
• Teams can leverage brand equity to attract and retain high caliber employees.
Companies tend to be most successful when they tie their vision and objectives to tangible communication strategies and tactics.
How can your firm benefit from integrated PR and strategic communications?
A 17-year PR veteran, Todd Barrish founded and leads day-to-day operations at Indicate Media, a digital public relations agency located in downtown New York City.